Hedge Funds Double Down on U.S. Stocks as Tech Buying Surges

TLDR:

• Hedge funds posted their second-largest weekly U.S. equity purchase in 12 months, led by technology stocks.
• Single stocks made up about 70% of U.S. net buying, while index futures and ETFs accounted for roughly 30%.
• Eight of 11 U.S. sectors were net bought as technology and communication services led hedge fund demand.
• Global hedge fund assets hit $5.6 trillion in Q2 after a record $409.3 billion increase, according to HFR.

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Hedge funds returned aggressively to U.S. stocks last week, buying equities every session as technology demand drove strong 2026 inflows. Goldman Sachs Prime Brokerage data, highlighted by The Kobeissi Letter, showed the second-largest weekly U.S. equity purchase by hedge funds during the past year.

The buying focused heavily on individual companies rather than broad market exposure, showing managers were rebuilding positions through selected stocks instead of index bets. Single stocks represented roughly 70% of total U.S. net purchases, while macro products, including index futures and ETFs, accounted for the remaining 30%.

Most single-stock demand came from new long positions, although short covering also contributed to the increase in exposure. Information technology and communication services attracted the strongest purchases, while eight of the 11 major U.S. sectors recorded net buying.

Meanwhile, short positions in U.S.-listed ETFs declined for a sixth consecutive week, as managers reduced defensive positioning.

Tech Buying Rebounds After July’s Record Hedge Fund Selloff

The renewed demand marked a sharp reversal from July, when Goldman reported the largest cumulative technology-sector selling recorded in its dataset. That earlier retreat followed an aggressive reduction in positions accumulated after the April market lows.

By mid-July, Goldman said managers had sold roughly 75% of the global equities purchased after those lows before earnings season began. Vincent Lin, co-head of Prime Insights and Analytics at Goldman, described the reduction as a crowded-position reset rather than abandoning artificial intelligence exposure.

As a result, the lighter positioning gave managers greater capacity to rebuild technology holdings once earnings results and broader market conditions improved. That renewed appetite coincided with another positive week on Wall Street, further supporting the return of institutional buying.

During the week ended August 14, the S&P 500 gained 0.4%, while the Nasdaq Composite advanced 0.1%. Both indexes consequently recorded their third consecutive weekly gains. Moreover, the S&P 500 reached a record closing high of 7,798.99 on August 13.

At the same time, stronger technology demand was not limited to hedge funds. State Street custody data showed demand for U.S. information-technology stocks had climbed to a five-year high over the previous month.

Meanwhile, corporate earnings provided additional support, with roughly 85% of S&P 500 companies reporting second-quarter results by mid-August exceeding earnings estimates, according to Reuters.

Hedge Fund Assets Rise as Stock Exposure Trails Early 2026 Levels

Alongside stronger earnings, hedge funds entered the rebound with considerably more capital available for deployment. HFR reported that global hedge fund assets increased by a record $409.3 billion during the second quarter, reaching $5.6 trillion.

Of that increase, performance gains contributed $364 billion, while estimated net investor inflows added another $45.2 billion. However, the additional capital has not yet pushed equity positioning back to early-2026 levels.

Goldman’s chart showed that cumulative single-stock trading flows remained below where they started the year. Therefore, the latest buying wave represents a significant rebuilding of exposure rather than a return to peak positioning.

However, that renewed appetite for risk quickly faced a market test. On August 18, the S&P 500 fell 0.67%, while the Nasdaq dropped 1.31%.

Rising Treasury yields and renewed semiconductor selling weighed on growth stocks, reversing some of the conditions that had supported the previous week’s technology-led advance.

Nevertheless, the latest positioning data showed that hedge funds had moved decisively back into U.S. stocks before Tuesday’s decline. Technology remained at the center of that renewed exposure, marking a clear reversal from the sector’s heavy selling earlier in the summer.

The post Hedge Funds Double Down on U.S. Stocks as Tech Buying Surges appeared first on Blockonomi.

Source: https://blockonomi.com/hedge-funds-double-down-on-u-s-stocks-as-tech-buying-surges/